India’s equity markets are reeling from massive foreign portfolio investor (FPI) outflows amounting to ~$4 billion amid recent U.S. tariff hikes.
The rupee has dropped to a record low, reflecting both external pressures and weak capital inflows.
Investors are looking nervously ahead to the U.S. Federal Reserve meeting, hoping for signals of eas
ing to stem outflows.
Key sectors like auto, pharma, and banking have shown relative strength recently, perhaps led by domestic policy tailwinds
.
Stock benchmarks ended last week on a positive note, helped by tax reforms and hopes of international rate cuts.
Yet sentiment is fragile; trade policy uncertainty and currency weakness remain looming challenges.
Retail investor flows, IPO activity, and domestic institutional buying are factors expected to moder
ate the sharpness of correction.
Analysts believe that the rupee’s performance and FII/DII migration will be critical signals for short-term market direction.
Companies should expect margin and cost pressures in import-intensive sectors if the rupee stays weak.
Overall, markets are in a wait-and-see mode, balancing domestic reform optimism with global headwinds.